Case 1:11-cv LG -RHW Document 32 Filed 12/08/11 Page 1 of 11

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1 Case 1:11-cv LG -RHW Document 32 Filed 12/08/11 Page 1 of 11 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF MISSISSIPPI SOUTHERN DIVISION CHRISTOPHER G. BATTLE and REBECCA L. BATTLE v. CAUSE NO. 1:11CV187-LG-RHW GMAC MORTGAGE, LLC; MORRIS & ASSOCIATES; and JOHN AND JANE DOES 1-10 DEFENDANTS ORDER GRANTING DEFENDANTS MOTION FOR SUMMARY JUDGMENT BEFORE THE COURT is the Motion [12] for Judgment on the Pleadings filed by GMAC Mortgage, LLC, and joined by Morris & Associates. The plaintiffs, 1 Christopher G. Battle and Rebecca L. Battle, have filed a response in opposition to the Motion, and GMAC has filed a reply. After providing the proper notice to the parties, the Court converted the Motion to a Motion for Summary Judgment. Upon reviewing the submissions of the parties and the applicable law, the Court finds that GMAC and Morris are entitled to judgment as a matter of law. FACTS In their Complaint, the Battles allege that they executed a promissory note 2 and deed of trust with Nbank, N.A., for their home in Biloxi, Mississippi. (Compl. 1 The response [25] was untimely, but the defendants have not filed a motion to strike the response. Therefore, the Court has considered it. 2 While the Battles claim in their Complaint that they originated their loan with Nbank, they allege that the lender was Quicken Loans in their Memorandum in Opposition to GMAC s Motion. In addition, the deed of trust reflects that Quicken Loans was the original lender. However, this discrepancy does not affect this Court s decision.

2 Case 1:11-cv LG -RHW Document 32 Filed 12/08/11 Page 2 of 11 3, ECF No. 1-2). The Battles believe that the deed of trust pertaining to their property was transferred to an unknown third party. (Id.) Initially, the Battles made monthly payments on the note, but they began experiencing financial difficulties and fell behind on their monthly payments. (Id.) They claim that they attempted to contact the holder of the note, who they believed was GMAC, in an attempt to save their home, but the defendants noticed their home for foreclosure. (Id.) Their home was sold in April of 2010 for $62,000. (Id.) The Battles assert that they do not know who is the current actual holder of their note, or who was the holder of the note at the time of the foreclosure. (Id.) The Battles claim that the deed of trust assignment was signed by a GMAC employee, Jeffery Stephan, who has testified at depositions taken in other cases that he does not read documents before he signs them and the notary is located offsite and does not notarize documents when they are signed. (Id. at 4). The Battles claim that Stephan is called the robo-signer, because at times, he has signed 12,000 documents per month. (Id.) The Battles have filed the following claims against the defendants: wrongful foreclosure, slander of title, private nuisance, and violation of the Fair Debt Collection Practices Act. (Id. at 5-8). They seek an undisclosed amount of actual damages, statutory damages, punitive damages, and attorney s fees and expenses. (Id. at 8). -2-

3 Case 1:11-cv LG -RHW Document 32 Filed 12/08/11 Page 3 of 11 DISCUSSION I. Jurisdiction GMAC removed this case to federal court on the basis of both diversity jurisdiction pursuant to 28 U.S.C and federal question jurisdiction pursuant to 28 U.S.C U.S.C confers federal diversity jurisdiction over civil actions where the matter in controversy exceeds the sum or value of $75,000, and the civil action is between citizens of different states. In its Notice of Removal, GMAC claims that the Battles are residents of Mississippi, that Morris & Associates is a Louisiana law firm with its principal place of business in Louisiana, and that GMAC is a Delaware limited liability company with its principal place of business in Pennsylvania. However, the citizenship of limited liability companies, partnerships, and other unincorporated associations and entities is based on the citizenship of each of its members. Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008). None of the parties have provided the Court with information concerning the citizenship of the members of GMAC or Morris & Associates. Therefore, the Court cannot determine whether diversity jurisdiction exists. 28 U.S.C provides that district courts have original jurisdiction over all actions arising under the Constitution, laws, or treaties of the United States. Additionally, federal district courts may have supplemental jurisdiction over claims involving state law where the court has original jurisdiction over some claims and where all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy. 28 U.S.C. -3-

4 Case 1:11-cv LG -RHW Document 32 Filed 12/08/11 Page 4 of (a). Supplemental jurisdiction may also be permitted whenever a separate claim within original jurisdiction is joined with one or more otherwise nonremovable claims or causes of action U.S.C. 1441(c). In that circumstance, the Court may either determine all issues presented in the case or remand all matters in which state law predominates. Id. Some of the Battles claims were filed pursuant to the Fair Debt Collection Practices Act ( FDCPA ), 15 U.S.C. 1692, et seq., but the remaining claims were filed pursuant to Mississippi law. 15 U.S.C. 1692k(d) provides that [a]n action to enforce any liability created by this subchapter may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs. Therefore, the Court finds that it has federal question jurisdiction over the Battles FDCPA claim, and supplemental jurisdiction over the Battles state law claims. II. Standard of Review After the pleadings have closed but early enough not to delay trial a party may move for judgment on the pleadings. Fed. R. Civ. P. 12(c). Motions for judgment on the pleadings are evaluated using the same standard as that applied to motions to dismiss filed pursuant to Fed. R. Civ. P. 12(b)(6). Gentilello v. Rege, 627 F.3d 540, (5th Cir. 2010). However, if a court considers matters outside the pleadings when ruling on a motion to dismiss or motion for judgment on the pleadings, the motion must be treated as a motion for summary judgment, but -4-

5 Case 1:11-cv LG -RHW Document 32 Filed 12/08/11 Page 5 of 11 [d]ocuments that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff s complaint and are central to her claim. Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004); see also Fed. R. Civ. P. 12(d). GMAC has submitted the deed of trust, an assignment of deed of trust, a substitution of trustee, and a letter addressed to the Battles in support of its Motion and Reply. The Battles have submitted deposition transcripts from other proceedings that were mentioned in the Complaint, a print-out from the MERS website, and a collection letter sent by Morris & Associates. The Battles also provided the assignment and the substitution that had previously been provided by GMAC. The substitution and the print-out from the MERS website were not mentioned in the Battles Complaint and are not a part of the pleadings. Therefore, GMAC s motion must be treated as a Motion for Summary Judgment. The Court has provided the parties with notice that the Motion will be converted to a Motion for Summary Judgment, and the parties have provided supplemental memoranda to the Court. See Fed. R. Civ. P. 12(d). III. The Battles Wrongful Foreclosure, Slander of Title, and Private Nuisance Claims: The Battles claim that the foreclosure was wrongful, because [t]he Defendants failed to establish who was the holder of the Note at the time of the foreclosure sale. (Compl. 5, ECF No. 1-2). In support of their slander of title claim, the Battles claim that the Defendants [sic] falsely, maliciously, willfully, -5-

6 Case 1:11-cv LG -RHW Document 32 Filed 12/08/11 Page 6 of 11 recklessly, and with wanton disregard filed instruments in the Harrison County land records disparaging Plaintiffs title to the home.... (Id. at 6). With regard to their private nuisance claim, the Battles state, Defendants intentionally, unreasonably, recklessly and negligently caused an invasion upon the private use and enjoyment of the Plaintiffs home.... (Id.) Thus, all of the Battles state law claims hinge on their argument that GMAC was not the holder of the note at the time of foreclosure. However, GMAC argues that it is not necessary for it to demonstrate that it was the holder of the note. In the alternative, it argues that the assignment of deed of trust and the substitution dated March 19, 2010, demonstrate that it was in fact the holder of the note. The Battles claim that Fannie Mae was the actual owner of the note on the date of the foreclosure and that GMAC was the servicer of the note. They rely on a printout made from the MERS website, on July 27, (Pls. Mem., Ex. B, ECF No. 26-2). The print-out does not mention the Battles names or the street address of the home at issue, but it does include the correct date of their note. (See id.) They have also submitted an affidavit signed by Christopher Battle in which he states that he believes that GMAC was servicing the loan on behalf of Fannie Mae. (Pls. Reply, Ex. B, ECF No. 29-2). The Mississippi Supreme Court has explained the procedure adopted by the state of Mississippi for non-judicial foreclosures: Under our procedure the property is conveyed by the grantor (trustor), subject only to the requirements that the grantor/debtor perform the conditions and provisions of the deed of trust.... Once properly filed -6-

7 Case 1:11-cv LG -RHW Document 32 Filed 12/08/11 Page 7 of 11 for record, the deed of trust is entitled to priority according to date of filing. Upon default by debtor in performance of the conditions of the trust, the trustee is empowered to foreclose. If the statutory requirements are observed, sale under the power is a perfect foreclosure. The trustee s deed is a conveyance absolute as though the trustee held fee simple title. It cuts off the equity of redemption and any other rights in and to the property (all of which are transferred to the foreclosure sale proceeds), with the sole exception of rights perfected prior to the filing of the deed of trust under which the foreclosure sale is held.... Peoples Bank & Trust Co. v. L&T Developers, Inc., 434 So. 2d 699, 708 (Miss. 1983) (internal citations omitted). Regardless of the form of conveyance, any deed of trust may confer on the trustee and his or her successors, assignees, and agents the power of sale. Jeffrey Jackson & Mary Miller, Encyclopedia of Miss. Law 51:4 (West 2001). If any of the conditions included in the deed of trust are breached, a power of sale is valid and binding under Mississippi law. Id. A valid assignment of a debt or contract conveys the entire interest of the assignor to the assignee, and thereafter the assignor has no interest therein.... As a general rule, a valid and unqualified assignment operates to transfer to the assignee all the right, title, or interest of the assignor in the thing assigned, but not to confer upon the assignee any greater right or interest than that possessed by the assignor. EB, Inc. v. Allen, 722 So. 2d 555, 564 ( 35) (Miss. 1998) (internal citations omitted). In EB, Inc., the Mississippi Supreme Court held that all of the assignor s right and interest in the note and deed of trust were transferred pursuant to the assignment. EB, Inc., 722 So. 2d at 564 ( 36). The Battles deed of trust gave Mortgage Electronic Registration Systems, -7-

8 Case 1:11-cv LG -RHW Document 32 Filed 12/08/11 Page 8 of 11 3 Inc. ( MERS ), as nominee for the lender, the right to foreclose on and sell the property. (GMAC s Supplemental Mem., Ex. A, 3, ECF No. 30-1). GMAC has submitted an assignment of deed of trust by which MERS sold, conveyed, and assigned the deed of trust together with the indebtedness secured thereby to GMAC. (GMAC s Mot., Ex. A, ECF No. 12-1). The assignment was signed by Jeffrey Stephan, the Vice-President of MERS on March 19, (Id.) GMAC has also submitted a substitution of trustee dated March 19, 2010, that provides that GMAC is the present holder and beneficiary of the deed of trust. (GMAC s Mot., Ex. B, ECF No. 12-2). Therefore, contrary to the Battles assertions, the note, the deed of trust, and the indebtedness secured thereby were assigned to GMAC on March 19, 2010, prior to the foreclosure sale in April of Furthermore, the Battles do not dispute that they breached the conditions of the deed of trust by failing to repay the debt. The MERS website print-out submitted by the Battles does not create a genuine issue of material fact concerning which entity owned the note, deed of 3 The MERS system is merely an electronic mortgage registration system and clearinghouse that tracks beneficial ownerships in, and servicing rights to, mortgage loans.... The system is designed to track transfers and avoid recording and other transfer fees that are otherwise associated with the sale. Richardson v. Citimortgage, Inc., No. 6:10CV119, 2010 WL at *5 (E.D. Tex. Nov. 22, 2010) (internal citations omitted). The deed of trust in the present case provides, The beneficiary of this Security Instrument is MERS (solely as nominee for Lender and Lender s successors and assigns) and the successors and assigns of MERS.... Borrower understands and agrees that MERS... has... the right to foreclose and sell the Property; and to take any action required of Lender.... (GMAC s Supplemental Mem., Ex. A, 3, ECF No. 30-1). -8-

9 Case 1:11-cv LG -RHW Document 32 Filed 12/08/11 Page 9 of 11 trust, and the indebtedness. The Battles admit in their Supplemental Memorandum that the MERS website is not always accurate. (Pls. Supplemental Mem. 4 n.1, ECF No. 29). In addition, the print-out does not identify the property or the debtors, and therefore, it is unclear whether it pertains to the Battles note. At most, the print-out would show who was the owner of the note as of the date on which the print-out was made, which was approximately three months after the foreclosure sale. Furthermore, Christopher Battle s subjective belief concerning who may have owned the note is mere speculation. Thus, under Mississippi law, once the deed of trust and the indebtedness secured thereby was assigned to GMAC and the Battles breached the conditions of the deed of trust, GMAC had the full authority to conduct a sale of the property. Finally, assuming for the sake of argument only that GMAC was not the owner of the deed of trust and/or promissory note, the Battles do not have standing to contest GMAC s foreclosure of the property. See Spositi v. Fed. Nat l Mortg. Ass n, No. 4:11-CV-542, 2011 WL *4-5 (E.D. Tex. Nov. 3, 2011). The Battles lost their interest in the property when they defaulted, a fact which is demonstrated by their own arguments in their Response and Supplemental Memorandum. (See, e.g., Pl. s Supplemental Mem. 7, ECF No. 29) ( Pursuant to Mississippi law, title to the Plaintiffs home vested in the trustee of their Deed of Trust, Michael Lyon, upon default.... ) As a result, GMAC is entitled to judgment as a matter of law as to the Battles wrongful foreclosure, slander of title, and private nuisance claims. Morris -9-

10 Case 1:11-cv LG -RHW Document 32 Filed 12/08/11 Page 10 of 11 & Associates, who joined the Motion, are entitled to judgment as a matter of law for the same reasons. IV. The Battles FDCPA Claim: In support of their FDCPA claim, the Battles claim that the defendants made false representations concerning to whom the debt was owed. (Compl. 7, ECF No. 1-2). They also claim that the defendants violated the FDCPA by collecting or attempting to collect amounts not permitted by law and by otherwise using unfair and unconscionable methods. (Id. at 8). As the Court has explained, supra, the indebtedness was owed to GMAC by virtue of the assignment. Therefore, no misrepresentations were included in the correspondence sent to the Battles. In addition, GMAC and Morris & Associates were entitled to collect the debt and foreclose on the property, because it is undisputed that the Battles defaulted. Therefore, GMAC and Morris & Associates are entitled to judgment as a matter of law. V. John and Jane Does 1-10 The Battles have sued John and Jane Does 1-10, but they have not attempted to name or serve these defendants. Since these are the only claims remaining in this lawsuit, the Battles will be given thirty days to name these John and Jane Doe defendants, or those claims will be dismissed. CONCLUSION The Battles admittedly defaulted on their loan. The indebtedness was owned by GMAC, and therefore, it was authorized to conduct a foreclosure sale. Therefore, -10-

11 Case 1:11-cv LG -RHW Document 32 Filed 12/08/11 Page 11 of 11 GMAC and Morris & Associates are entitled to judgment as a matter of law as to all of the claims asserted by the Battles. IT IS, THEREFORE, ORDERED AND ADJUDGED that the Motion [12] for Judgment on the Pleadings filed by GMAC Mortgage, LLC, and joined by Morris & Associates, which was converted to a Motion for Summary Judgment by the Court, is GRANTED. The Battles claims against GMAC Mortgage, LLC, and Morris & Associates are hereby DISMISSED WITH PREJUDICE. IT IS, FURTHER, ORDERED AND ADJUDGED that the Battles must file an amended complaint naming John and Jane Does 1-10 within thirty days of the date of this Memorandum Opinion and Order or those claims will also be dismissed. th SO ORDERED AND ADJUDGED this the 8 day of December, s/ Louis Guirola, Jr. LOUIS GUIROLA, JR. CHIEF U.S. DISTRICT JUDGE -11-